New bowling alley lease couldn’t keep South Florida’s retail market out of the gutter in Q4
Palm Beach County was the only place where average rents rose
Even with a newly inked 62,000-square-foot bowling alley lease, South Florida’s retail market saw mostly gutter balls in the fourth quarter.
Across the tri-county area, vacancy rates rose and square footage returned to the market, according to a newly released report from Colliers International. And yet in some parts of the region, average asking rents rose, and landlords landed some large leases and buyers.
With relatively limited construction in the works, retailers may take advantage of market weakness and growing population centers, giving retail some long-term health, according to the report.
Here’s a breakdown:
Miami-Dade had the lowest vacancy rate of the tri-county area, at 4.6 percent in the fourth quarter, up slightly from 4.5 percent in the third quarter of 2020 and the fourth quarter of 2019.
Retail tenants returned 42,000 square feet of space to the market. The county saw little new construction delivered, at 28,000 square feet — the smallest amount in a year. It has 1.8 million square feet of retail space under construction.
The average asking rent of $35.83 a square foot was down 0.4 percent, quarter-over-quarter, and down 6.5 percent, year-over-year.
Two of the largest leases signed during the quarter were for gyms. Crunch Fitness signed 34,000 square feet at Cutler Bay Towne Center, and Planet Fitness signed for 18,000 square feet at River Landing in Miami, which opened in the fall. Ross Dress for Less signed 24,000 square feet at Doral Square.
Some of the biggest real estate sales during the quarter aim for redevelopment. Midtown Development bought Shops at Sunset Place in South Miami for $65.5 million, with plans to reduce retail and add office, apartments, hotel and parking space. AvalonBay paid $19 million for a 21,000-square-foot Winn-Dixie property in South Miami, with plans to add grocery, apartments and parking spaces.
Broward saw the highest vacancy rate in the region at 5.6 percent, up from 5.1 percent in the third quarter of 2020 and up from 4.5 percent in the fourth quarter of 2019.
Retail tenants returned 181,000 square feet of retail space to the market. This marked the third consecutive quarter of negative net absorption and increased vacancy.
The county had 235,000 square feet of new construction delivered during the quarter, and has 628,000 square feet under construction.
The $21.92 average rent per square foot was the lowest in the region, down 1 percent, quarter-over-quarter, and down 4 percent, year-over-year.
Some retailers may be taking advantage of the weakened market. Publix leased 23,000 square feet at 16000 Pines Market in Pembroke Pines, which is under construction and expected to open this year. Other tenants to pre-lease space at the shopping center are Verizon Wireless and Everglades Family Dental.
Other big leases signed in the county during the quarter include Party Tyme World taking 24,000 square feet at 11210 to 11300 Pines Boulevard, Pembroke Pines; Learning City Academy taking 10,000 square feet at 9897 West Oakland Park Boulevard, Sunrise; Breed of Human taking 10,000 square feet at 191 South Bryan Road, Dania Beach; and My Salon Suite taking 7,000 square feet at 6261 to 6301 West Sample Road, Coral Springs.
Investors bought shopping centers and drug stores. Some of the top sales include the Mattos family expanding its South Florida holdings by buying a shopping center in Weston for $20.45 million and an Oakland Park Walgreens store selling for $7.3 million.
Palm Beach County
The county had a vacancy rate of 5.2 percent, down from 5.3 percent in the third quarter of 2020, and up from 4.5 percent in the fourth quarter of 2019.
Palm Beach saw a limited amount of construction, with 18,000 square feet of new retail delivered during the quarter. Another 504,000 square feet of space is under construction.
Rent averaged at $23.45 a square foot, up 3 percent, quarter-over-quarter, and up 4 percent, year-over-year.
Big leases inked during the quarter include Bowlero leasing 62,000 square feet for a bowling alley at 21046 Commercial Trail in Boca Raton, which marked one of the largest lease deals of the year.
Big sales included Fortress Investment Group, Hyde Retail Partners and Kean Development selling the Tiffany & Co. building on Worth Avenue in Palm Beach for $26.4 million.